FICO credit scores, calculated and issued by the Fair Isaacs Company, have long been the industry standard in credit scoring models. In 2006, the three major credit reporting bureaus (Experian, TransUnion and Equifax) rolled out a new, generic scoring model. The VantageScore has recently gotten more attention and, presumably, more lenders relying on the model … Maybe.

Unlike FICO’s 300 – 850 credit range, the VantageScore ranges from 501 – 990 and also provides a letter grade of A – F, with A being the highest. This scoring model is easier for many people to comprehend. After all, everyone with a credit score has presumably gone to school and Americans universally understand the meaning of letter grades. “A” means you should get the best rates available (if lenders check your VantageScore) and “F” means sorry, you probably won’t get the loan.

No Credit History? No Problem for VantageScore

VantageScore was created, jointly, by the three major credit reporting companies, Equifax, Experian and TransUnion, which means it should provide a more consistent interpretation of consumers’ credit files. Any discrepancy in scores, says the VantageScore website, is due to inconsistencies in your credit reports, not variations in scoring algorithms.

According to some sources, the VantageScore also uses a model that doesn’t penalize people for having a short credit history or a slim credit file. Instead, according to the company website, the scoring model can provide “predictive scores” for people with a short credit history.

Additionally, the scoring model weighs factors differently than the FICO scoring model, with the depth of an applicant’s credit making up only 13% of the Vantage Score and recent credit making up only 10 %.

The VantageScore evaluates, primarily, a borrower’s 24-month credit history. That’s why it’s easier to have a high VantageScore even if you haven’t had credit very long.

The FICO model of scoring is kept secret; FICO will not reveal the exact formulas used, but says it varies for each customer based on their credit history.

Because the Vantage Score uses a more clear cut scoring model, it’s (theoretically) easier to take specific action to improve your score. Here’s the breakdown of the VantageScore model, according to an article on HubPages.

Payment History: 32%

Utilization: 23%

Balances: 15%

Depth of Credit: 13%

Recent Credit: 10%

Available Credit: 7%

On-Time Payments Still King of the Scoring World

One thing that the FICO credit scores and the VantageScore have in common is that your payment history is the biggest factor in determining your score. Delinquent payments of more than 90 days will hit your VantageScore hard. The idea of the score is to let lenders know how likely you are to go delinquent by 90 days or more on their account, so late payments hurt your score a lot, just as they hurt your FICO credit score.

Do Lenders Use the VantageScore?

Regardless of how consistent, easy-to-understand, or accurate a credit score is, it’s not worth much if lenders don’t consider it in their quest to decide whether or not to approve you for a loan. So far, the VantageScore has yet to gain widespread appeal.

A few Internet searches show that “seven out of the top 50” auto lenders use the credit score, and three out of 10 major mortgage lenders.

Using the VantageScore to Your Advantage

Since the VantageScore weighs people with a “thin” credit file or short credit history more favorably than a FICO score does, if you are a financially stable individual who primarily relies on cash, it might make sense for you to seek out a lender who uses the VantageScore in determining your creditworthiness.

If you need to make a large purchase using credit (for instance, a mortgage to buy business property or a house), it might pay to shop around for a lender who will give you a good rate even if you don’t use credit often. It’s worth noting the TransUnion’s TrueCredit credit monitoring service recently started offering the VantageScore instead of FICO scores to customers. Meanwhile, Experian’s FICO score is no longer available through MyFICO.com, one of the leading websites to obtain your true FICO score.

FICO Still the Standard

For now, FICO remains the industry standard for lenders to determine a borrower’s creditworthiness. Fortunately, since on-time payments are still the key factor in earning or maintaining a high credit score with any credit scoring model, if you live within your means, manage your credit and make the minimum payments on all your loans on time, consistently, you’ll be on your way to a high credit score regardless of who’s doing the math.

This post was last updated on Tuesday, June 29th, 2010

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Dawn Allcot is a full-time writer, editor and blogger whose career spans two decades. Dawn joined the CreditShout team nearly two years ago. Since then, she's been sharing her knowledge and enthusiasm for managing credit and saving money through responsible credit card use.

I can’t even get the credit bureaus to list my correct address let alone list accurate credit information,,,,,I did write all 3 and recieved letters , back some stating that would continue to list my address as 2780 tampa rd ,oldsmar,fl ………..this address in a Public Storage ,where I had stored some household items , but have not for the last 3 years….I was told I would have to send a copy of my drivers license and 3 other forms of proof such as electrical bills , cable and phone bills and that they Transunion did not have to do anything to correct my address,,,,then they sent that letter to the address in michigan where I said I had lived for the last 4 years …SO WHAT’S UP WITH THESE PEOPLE??

I also have incorrect credit info , but know there is not a snowball’s chance in hell of getting something like that corrected …..for example there was an account called midland credit of which I never had a contract with , called them and they said it would be removed , and it was, but now a Midland funds with the same address and phone as midland credit shows up as a new account …